New Zealand shares extended their decline after a stellar first quarter, as the high kiwi weighed on companies with US dollar sales, such as Fisher & Paykel Healthcare.
The NZX 50 Index fell 10.524 points, or 0.2 percent, to 4409.539, retreating from the record high reached at the end of the first quarter. Within the index, 20 stocks fell, 18 rose and 12 were unchanged. Turnover was $128 million.
The kiwi traded at a 20-month high of 85.98 US cents and has gained to a post-float high on a trade-weighted basis, reducing the value of firms’ offshore sales and boosting importers’ use of spot prices to bring in their goods.
F&P Healthcare, which gets more than 50 percent of revenue in US dollars, fell 2.4 percent to $2.42.
The impact of the high kiwi on Healthcare needs to be balanced against the benefits of having new products in the US market, says James Lindsay, portfolio manager at Tyndall Asset Management.
“Stock markets around the world have had a pretty good quarter. Having a pause and waiting for new information probably isn’t a surprise.”
Air New Zealand fell 1.4 percent to $1.45. A strong currency makes New Zealand a more expensive place to visit.
Pumpkin Patch, the children’s clothing chain, declined 6.1 percent to $1.08. Apparel was one of the weakest segments of the retail market in the latest electronic card spending data this week.
Warehouse, the biggest retailer on the bourse, rose 1.1 percent to $3.73. Chief executive Mark Powell told reporters his buyers have been clamouring to buy products overseas at prevailing spot rates for the currency, though in a tough retail environment most of that is being passed on to customers.
Telecom dipped 1.2 percent to $2.43. Forsyth Barr analyst Blair Galpin downgraded the stock to ‘reduce’ from `hold’. Based on a Reuters poll of 10 analysts, the stock is rated ‘underperform’, with a median price target of $2.20.
Mr Lindsay says institutional investors have been kept busy with new issues coming to market, including Mighty River Power, and he cites sales of strategic sales of stakes in Trade Me, Sky Network Television and Auckland International Airport as having “performed well for investors”.
Trade Me, the auction website, rose 0.2 percent to $4.79 and Sky TV dipped 0.2 percent to $5.35. Auckland Airport was unchanged at $2.87.
Fletcher Building, the construction and building supplies group, rose 0.4 percent to $8.60 after Real Estate Institute figures showed house sales rose to a six-year high in March.